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You’ll Never Guess Which Travel Site Americans Are Most Loyal To (Hint: It’s Not Priceline) Steve Symington

With the advent of online travel sites, it’s never been easier to book a quick vacation, business trip, or even a spontaneous jaunt for almost anywhere in the world. Though the online travel industry is relatively young, it’s still growing quickly, with dozens of viable sites ready to make your trip happen.

The sites with the most loyal customers stand to grab the biggest share of this market as Internet usage increases around the world. But maintaining customer loyalty is even more challenging in markets like the United States, where online travel is becoming second nature as nearly 90% of the population is already online.

Thanks to online travel sites, resorts like this are just a click away.

This of course begs the question, which travel site are Americans the most loyal to?

Thanks to prominent advertising campaigns, several incorrect names might immediately come to mind. Take the various sites operated by Priceline Group (NASDAQ: PCLN), for example, which notably include priceline.com, KAYAK, booking.com, rentalcars.com, and — thanks to a $2.6 billion acquisition last year — even restaurant reservations specialist OpenTable. Since it was founded in 1997, Priceline has enjoyed the charisma of spokesman William Shatner talking up its negotiating skills, while KAYAK earns business by comparing the prices of “hundreds” of travel sites at once.

Collectively, these businesses helped Priceline Group achieve $50.3 billion in total gross bookings last year alone. And with a market capitalization higher than $61 billion as of this writing, it’s no surprise Priceline regularly calls itself the “world leader in online accommodation reservations.” But “world leader” or not, none of Priceline’s sites are tops in customer loyalty.

Or how about Hotwire? Specific financial details are scarce for the privately held site, but Hotwire earns customers by selling off unsold travel inventory at a huge discount, saving people planeloads of cash on all their travel needs from airfare to hotels, rental cars, and comprehensive travel packages.

Unfortunately, though, even Hotwire’s approach doesn’t translate to the most loyal users. It’s not Expedia (NASDAQ: EXPE), either — though we’re getting closer.

Travelocity’s roaming gnome, Credit: Travelocity

Love for the Roaming Gnome

According to the 19th annual Brand Keys Customer Loyalty Engagement Index, American consumers are most loyal to a travel site acquired by Expedia less than two months ago: Travelocity.com. On January 23, 2015, Expedia paid $280 million in cash to buy Travelocity from travel-technology specialist Sabre (NASDAQ: SABR), which itself was a subsidiary of American Airlines until being spun off in 2000.

According to Brand Keys president Robert Passikoff, 2015 was Travelocity’s first year atop its category in loyalty. And this year’s results were driven by the brands’ abilities to “identify customers’ expectations and address them via authentic emotional values.” So why do Americans specifically love Travelocity so much?

A little focus goes a long way

First, keep in mind that Travelocity signed a strategic marketing agreement with Expedia in mid-2013. Per the terms of that deal, Expedia agreed to take the reins of the technology platform powering Travelocity’s U.S. and Canadian websites. In exchange, Expedia received performance-based marketing fees that varied based on the amount of travel booked through those Travelocity-branded sites.

While this meant less revenue for Travelocity at the time, it also greatly improved the site’s profitability by drastically lowering operating costs. In its most recently reported quarter as part of Sabre, for instance, Travelocity’s adjusted revenue fell nearly 45% year over year, to $89 million, while adjusted EBITDA skyrocketed 116% to $16 million. Without the need to focus on maintaining its technology platform, Travelocity was free to redirect those resources toward promoting its brand — something it arguably did more effectively than any of its deep-pocketed rivals, anyway.

Take Travelocity’s “Roaming Gnome” mascot, for example, whose offbeat TV spots have been at the heart of its viral advertising efforts for more than a decade. But starting in 2013, Travelocity also began using the gnome to engage consumers on a personal level with a wildly successful social media campaign centered around the hashtag #IWannaGo.

By following the @roaminggnome handle on Twitter or Instagram, then using the hashtag to tell Travelocity where you wanted to go, you were automatically entered to win a chance to make your travel dreams come true. Then. last year, Travelocity built on that momentum by combining the hashtag with its new “Go & Smell the Roses” tag line.

According to Travelocity chief marketing officer Bradley Wilson: “‘Go & Smell the Roses’ is more than a tag line in an advertising campaign, it’s a rally cry. […] We are using our most powerful asset, the iconic Roaming Gnome, to inspire and instigate people to get off the couch, to go and smell the roses.”

If Brand Keys’ latest Loyalty Index is any indication, Travelocity’s efforts to connect to customers on an emotional level are obviously proving effective in its core American market. If it can translate that good work under Expedia’s wing to inspire people around the world, something tells me Expedia’s $280 million purchase price will look brilliant in the end.

Hotel brands, online travel intermediaries and technology solution providers are all too aware that online conversion is a huge issue. Depending on who you talk to, online conversion rates for most travel websites sit in the low single digits and all stakeholders are challenged with what to do about it.

So, which way is the industry moving and how does price transparency fit in?

While more hotels are today educated about the ‘billboard effect’ and its role in increasing direct sales, research released by SalesCycle earlier this year will have been welcomed by anyone involved in selling travel online for the insight it provided into the reasons travellers abandon a booking.

As a refresher, most travellers (39 percent) say they are just looking and want to do further research, while high prices/desire to compare and the need to involve others in the process were cited as the next two biggest reasons.

Finally, stumbling blocks – such as an over-complex booking process, technical issues and payment problems – were also reasons cited for abandoning a booking.

Empowering travellers to make the choice

A deeper dive into the SalesCycle research also reveals where in the booking path travellers drop off and more than half admit to abandoning a booking when they are shown the total price.

It’s no wonder, then, that brands and intermediaries employ various techniques to keep people on their sites and ensure they have everything they need to complete the booking.

One good example, recently reported by Tnooz, was a move by UK-based chain Shire Inns which recently introduced a price comparison feature on its website.

It seems like a risky move because the hotel group could lose the booking altogether by enabling potential guests to compare its rates against those of four large online travel agencies (OTAs). It could also risk the ire of those same OTAs but Shire argues that it recognises travellers want to shop around.

Getting the distribution mix right

Early results are positive for Shire, with the chain experiencing significantly-improved, double-digit conversion rates. Not a bad result when considering the industry average is around four percent.

What the story highlights is the need for hoteliers to track where their guests are coming from and ensure they are getting their distribution mix right, both direct and indirect.

On the one hand, hoteliers should not be paying twice for guests they believe they would have attracted anyway. However, most hoteliers recognise the value they get from the OTAs, in terms of the extended reach they offer via the sales marketing clout that sits behind the online giants and helps smooth out the peaks and troughs in the hotel business.

So, moves from hoteliers to push the direct channel are only a part of the equation.

SiteMinder recently produced its own findings on the power of direct bookings, showing that while Booking.com continues to hold the top spot when it comes to revenue generation, TheBookingButton Internet booking engine came third in terms of business to hotels.

So where does hotel distribution go from here?

2014 was certainly a year of upheaval with further consolidation in the online travel market and new entrants to consider in the mix. 2015 has not been that different so far with Expedia’s planned acquisition of Orbitz and rumours around Priceline acquiring RocketMiles.

No one can say where it will all end up.

Hoteliers will continue to consider initiatives like Shire Inns’ price comparison tool because, ultimately, it’s about attracting, reaching and converting all travellers, and giving them the choice to book what they want in the way they want.

But as part of the increasingly-complex distribution strategy that today’s Internet economy demands, hoteliers will – and should – also continue to sell rooms via a mix of channels, direct and indirect, to ensure their businesses reap the benefit of reaching both global and local travel markets to generate the most value and in the most effective way.

Like this:

Engagement Labs, the technology and data company, has recently released the social media rankings of the top performing hotel chains, airlines, online travel agencies (OTAs) and metasearch sites.

The rankings are based on Engagement Labs’ eValue scores, which take into account three factors: Engagement, Impact and Responsiveness.

The top three hospitality companies on Twitter are (in order) Hyatt Hotels, The Ritz-Carlton Hotel Company and Trump Hotel Collection. Hyatt was highlighted for using highly visual vacation-related content and the use of creative hashtags.

The top three Facebook marketers in the hotel industry are The Ritz-Carlton Hotel Company, Mandarin Oriental Hotel Group and Country Inns & Suites by Carlson. Ritz-Carlton stood out based on its regular engagement with travelers and its posting of images and facts of its resorts.

“As social media is increasingly becoming an all-purpose communication tool, the hotel industry excels by providing real-time information to their customers on their social media channels,” said Bryan Segal, chief executive officer of Engagement Labs, via a release. “Companies like The Ritz-Carlton Hotel Company and Hyatt Hotels utilize their social media channels to provide up-to-date resort news and industry information as a one stop shop for their audiences.”

American Airlines, United Airlines and Alaska Airlines led carriers in Twitter marketing. American Airlines also was No. 1 in Facebook marketing, followed by Island Air and Delta Air Lines.

On Twitter, American Airlines was adept at responding to consumer postings and weaving in topical news and events to drive interest, according to Engagement Labs.

On Facebook, American Airlines received a high eValue score for updating travelers on company information and relating major news and events back to the airline industry (to celebrate Women’s History Month, the major carrier asked Facebook followers to share stories about female American Airlines members who exemplified premier customer service).

In terms of the travel aggregators (OTAs and metasearch sites), Hotels.com, OneTravel and CheapOair were the top Twitter marketers (parent company Fareportal owns both OneTravel and CheapOair). Hotels.com was highlighted for using Twitter to dish out the latest deals and promotions, as well as posting travel tips and trivia to boost engagement.

BookIt.com, Orbitz Worldwide and Travelocity were the top three Facebook marketers. BookIt.com scored highly in large part because the site posted articles that included travel ideas, tips for things to do in particular destinations, and contests for their followers to win trips to different destinations.

Travelers on social media “want convenience, trusted brands and good deals,” Segal said. “Social media is a key resource to help consumers navigate the complexity of travel today. We see marketers optimizing social channels to enhance user experience, customer satisfaction and develop trust and loyalty with their audiences.”

Engagement Labs’ eValue Analytics leverages more than 300 conventional social media metrics to produce a single benchmarked score, analyzing more than 75,000 handpicked, verified brands that include marketers, advertisers, publishers and broadcasters around the world.

New studies on Asia’s cruise market released by the Hong Kong Tourism Board (HKTB) reveal a potential 83 million cruise passengers in Greater China and highlight how Hong Kong and regional ports are gearing up to tap into this market by upgrading cruise infrastructure and tourism offerings.

In April 2014, the Hong Kong Tourism Board together with the Taiwan Tourism Bureau launched the first-ever Asia Cruise Fund, an initiative aimed at offering better support to cruise lines and promoting regional co-operation for attracting cruise tourism.

The studies – the Asia Cruise Potential and Passenger Behaviour Study and the Asia Cruise Port Development Study – are the first of their kind and were released this week at Cruise Shipping Miami.

The two studies were carried out by the School of Hotel and Tourism Management of the Hong Kong Polytechnic University with the aim of providing insight and useful information to help cruise companies unlock the region’s cruise potential.

The Asia Cruise Potential and Passenger Behaviour Study specifically examined the potential market in Greater China, which is currently the largest source of cruise travellers in Asia and the eighth largest in the world, according to the Cruise Lines International Association (CLIA).

The study reveals a potential 83 million cruise passengers in just seven source markets within Greater China. This figure is four times the current number of cruise passengers world-wide. Hong Kong, with its connectivity to the Pearl River Delta, Central China and Taiwan by air, high speed rail and land transportation via the Hong Kong-Zhuhai-Macao Bridge, is looking at a cruise potential of 54 million passengers.

The study also reveals that the make-up of these passengers is younger and more family-oriented than cruise passengers in traditional source markets such as North America and Europe, where they tend to be older, retired achievers.

The second study, Asia’s Cruise Port Development Study, focused on the development of ports in Hong Kong and neighbouring areas. Its results highlight the commitment throughout the region to facilitate the growth in cruise business by improving port facilities and tourism offerings in the next five to 20 years.

Positioning Hong Kong as the home ship destination, the study identifies 21 ports within 6-7 cruise days which already have concrete plans to upgrade berths, cruise infrastructure and supporting infrastructure, as well as expand tourism offerings and improve destination management in areas such as the issuing of visas.

These ports include: Sanya, Xiamen, Zhoushan, Qingdao and Yantai in China, Keelung, Hualien, Kaohsiung, Anping, Taichung, Penghu, Kinmen and Matsu in Taiwan, Miyakojima and Takamatsu in Japan, Mokpo and Yeosu in South Korea, Hon La in Vietnam, plus Manila, Boracay and Puerto Princesa in the Philippines.

According to the study, within five years, half of these ports will be able to receive cruise ships of 100,000 gross tonnage. This will give cruise companies more flexibility in deploying their fleet and planning interesting itineraries with cultural, scenic or adventure activities to cater for all market segments.

Anthony Lau, executive director of the Hong Kong Tourism Board, said, “With the results of the two surveys showing the great potential and committed development, combined with the Asia Cruise Fund, Asia’s cruise tourism is ready to take off.”

In April 2014, the Hong Kong Tourism Board together with the Taiwan Tourism Bureau launched the first-ever Asia Cruise Fund, an initiative aimed at offering better support to cruise lines and promoting regional co-operation for attracting cruise tourism.

The fund now has four members since the addition of Hainan in China and the Philippines. More new members are expected to join soon.

Vayant brings its FastSearch, the inspirational sub-second airfare shopping product that precomputes large datasets of customer-defined flight search results and keeps them fresh and easily available for marketing purposes via API.

Vayant Travel Technologies, a leading company in airfare search innovation, and ArrivalGuides, the destination content supplier, announced a partnership agreement for a joint marketing solution that allows travel companies to target flight offers alongside inspiring destination images and content.

By combining their respective strengths the partners aim to make it easier for airlines and travel agencies to provide rich content-driven experiences on their ecommerce websites. As the world’s leading network of high quality and up-to-date destination information and city guides, ArrivalGuides brings compelling destination content to inspire travellers to choose, book and plan their trip. Currently, this covers over 500 destinations and includes 35,000+ points of interest.Vayant brings its FastSearch, the inspirational sub-second airfare shopping product that precomputes large datasets of customer-defined flight search results and keeps them fresh and easily available for marketing purposes via API.

With ArrivalGuides we’re making it easy for all kinds of travel sellers to deploy this kind of quality content on their websites.”Ola Zetterlof, Director of Content Solutions, ArrivalGuides, said: “High quality destination content is key for inspiration and to trigger a booking – with Vayant, we add a new dimension with airfare pricing that’s fast and accurate.” –

The new European Travel Commission project focuses on six high potential markets, namely Brazil, Canada, China, Japan, Russia and the United States. This fact-finding research offers a bird’s-eye view of the competitive environment in the global tourism marketplace, and a portrait of the tourism strategy and marketing activities of competing destinations in each market.

In an increasingly vibrant landscape, marked by new players, technological innovation and rapidly changing consumers, the need arises for European destinations to closely monitor others’ effort to win market shares in the global tourism market.

This report is meant to support private and public organisations in the tourism sector to achieve a better understanding of the environment in which they operate. Its aim is to provide meaningful knowledge about best prospect markets, and the tourism strategies destinations worldwide have implemented in these key markets.

This report is part of a broader study tailor made for European tourism destinations in general and ETC members in particular.This project focuses on six high potential markets, namely Brazil, Canada, China, Japan, Russia and the United States. This fact-finding research offers a bird’s-eye view of the competitive environment in the global tourism marketplace, and a portrait of the tourism strategy and marketing activities of competing destinations in each market.

Information has been gathered through publicly available documents, and eventually enriched with first-hand information gathered through personal interviews with NTOs marketing directors, representatives of the travel trade and experts. Key results are presented in this executive summary, conceived for dissemination to the public at large. In this analysis, Europe is defined as the 33 countries which are members of the European Travel Commission plus France, the Netherlands and the United Kingdom.

Expedia’s Orbitz deal sends travel stocks flying

When Online travel service Expedia (EXPE) announced plans to buy smaller rival Orbitz Worldwide (OWW) for $1.3 billion, it became the latest consolidation in the $444 billion online travel industry. Shares of both companies surged on the news. In afternoon trading Expedia was up nearly 17 percent, and Orbitz had shot almost 22 percent higher.

On the takeover news, shares of other travel sites also took off. TripAdvisor (TRIP) rose nearly 24 percent, and Home Away (AWAY) was trading 7 percent higher, indicating that investors see more industry deals on the horizon. Even industry giant Priceline (PCLN) was up more than 3 percent. Companies outside the U.S. are especially attractive to the larger players, analysts say.

Bellevue, Washington-based Expedia will pay $12 per share in cash for Orbitz, which is headquartered in Chicago. That’s a 29 percent increase over Orbitz’ average trading price during the previous five days. The deal would add Orbitz to Expedia’s already-formidable lineup of online travel brands, which include Hotels.com, Trivago and Hotwire, and promises to ratchet up competition in an industry where it’s already intense.

Expedia shouldn’t face any significant regulatory hurdles because the online travel market remains fragmented. Moreover, Orbitz had struggled for a while, and rumors have circulated that it would be sold to a larger rival, according to analysts.

“It was just a matter of who would buy Orbitz and when,” said Henry H. Harteveldt, founder and travel industry analyst at Atmosphere Research Group, in an interview. “Orbitz just really didn’t have a clear marketing direction. They have just been kind of an aimless brand for the past three or four years. ”

Orbitz CEO Barney Harford, a former Expedia executive, could remain with the company after the sale is completed, according to Harteveldt. An Orbitz spokesperson told CBS MoneyWatch that no announcements about personnel have been made and declined to provide a timeline about when the deal might close.

“Barney came from Expedia, and I think he’d be comfortable returning to the fold,” Harteveldt said. “However, Expedia will have to give him a meaty-enough role, and he’ll want the opportunity for further advancement.”

A larger Expedia should be good news for consumers because it will keep the power of airlines in check, according to the Business Travel Coalition, which represents corporate travel departments.

“Strong, independent distributors are necessary to keep the airlines honest on their websites and in their offerings to consumers,” wrote Kevin Mitchell, the organization’s chair, in an email to CBS MoneyWatch. “These distributors provide consumers with the comparison-shopping tools that keep pricing discipline in the system. In the alternative, consumers would have to go to the Walled Gardens of each airline website and spend hours trying to determine the best deal. Of course, often, they would not.”

Expedia’s growing strength in the travel market, however, is bound to worry suppliers of travel services, according to Harteveldt. He added that the impact on consumers remains to be seen, though most won’t notice any changes, at least at first.

“The hotels and airlines in particular will be greatly concerned about the juggernaut that Expedia has become,” he said. “Right now, Orbitz and Expedia compete to offer access to inventory and prices. If the merger is approved, eventually Orbitz will be powered by the same back-end system as Expedia, with the same prices as a result. The only difference will be the web page’s design.”

Investors expecting more deals are probably on the right track, considering how active the industry has been consolidating recently. Priceline acquired rival Kayak Software in 2013 for $522.4 million. A year later, the Connecticut-based company branched out a bit and bought restaurant reservation service Open Table for $2.6 billion.

In July, Expedia said it was buying Australian booking site Wotif.com for $658 million. And barely a month ago, it announced plans to buy rival Travelocity for $280 million. In fact, just a week ago, Expedia Chief Financial Officer Mark Okerstrom shot down speculation that his company would be doing more acquisitions, telling The Wall Street Journal, “we’ve got our hands full right now.”

According to research firm Phocuswright, online travel agencies account for about 16 percent of the total U.S. travel market, or about $51.4 billion, a sign that the industry has plenty of room to grow.

“It has become a two-horse race between Expedia and Priceline globally.” Said Phocuswright Vice President Douglas Quinby

Leading travel e-retailers are using technology to speed up and individualise their offers, according to top executives at a recent fvw event.

Expedia-Europa-Chef Andreas Nau

Online travel giant Expedia cannot afford to carefully plan a medium-term strategy, Andreas Nau, head of Expedia Europe, told the fvw Online Marketing Day in Frankfurt. “We have to be fast, test and be allowed to make mistakes,” he declared.

For example, Expedia is currently testing a new form of hotel evaluation in 60,000 properties via a new app. “Customers can quickly give their views on the reception, service and overall impressions via smileys,” he explained to some 270 participants. Hoteliers “are already addicted to it” and respond quickly, he said.

Outlining some new products, Nau said that Expedia has developed a tool enabling hoteliers to change their prices via a mobile device, and is working on a method of presenting room prices like on a stock exchange.

Tom Breckwoldt, TripAdvisor’s Germany chief

Meanwhile, TripAdvisor is rapidly embarking on a new ‘customer journey’ and adapting itself to changing user habits, and the rapid advance of mobile devices, above all. “More than 50% of all content is consumed by mobile today,” said Tom Breckwoldt, Germany chief of the evaluation portal.

TripAdvisor no longer just wants to display hotel rankings ahead of a trip but also offer additional services at the destination, such as restaurant visits or excursions. The company has already bought content providers such as restaurant finder La Fourchette and activity finder Viator. Such activities will then be bookable on the company’s mobile portal.

Breckwoldt stressed: “Our core business remains the rankings, the evaluation of hotels and other services.” But he also predicted rapid growth of destination-based mobile bookings due to the spread of mobile devices and free wi-fi.

Facebook is also a good source of information for online tourism marketing, especially because companies can form clusters of users to target, Benjamin Schroeter, managing director of Facelift Brand Building Technologies, told the event. Tour operators, for example, could target specific groups for last-minute sales, he pointed out.

Meanwhile, this year’s fvw Online Marketing Award was won by the Hamburg tourist board for their mobile app, which acts as a city guide with detailed additional information as well as user evaluation options. The app has been downloaded more than 65,000 times since its launch in mid-2014.

Amadeus, a leading technology partner for the global travel industry and Southwest Airlines announced today a new milestone in their partnership. Under a new multi-year agreement, Amadeus’ corporate travel booking tool users around the world will gain access to Southwest’s fares and inventory.

“Providing seamless functionality and booking ease to our corporate customers worldwide is a focus we share with Amadeus,” said Kevin Krone, Vice President Marketing and Chief Marketing Officer, Southwest Airlines. “This new global agreement marks another milestone in our continued partnership, offering a new dimension in distribution to deliver world-class access to our entire available inventory of seats to more than 90 destinations.”

With the direct implementation of Southwest’s content, users of Amadeus’ e-Travel Management and i:FAO’s cytric corporate booking tools will gain benefits such as:

Greater functionalities including live availability and last seat inventory delivered via an integrated display

Functionality supporting all pricing rules, fare rules and return of ticket number

Fare searches returning the lowest fares available

Booking and ticketing capabilities for the carrier’s loyalty program/Rapid Rewards members